Strong results drive continued reduction in company's leverage
Suzano, the world's leading eucalyptus pulp producer and a global benchmark in the manufacture of bioproducts developed from eucalyptus, reported operating cash generation of R$4.9 billion for the three months to 30 June 2021 (2Q21). This represents a 47% increase compared to the same period last year (2Q20) and the best quarterly result since Suzano’s inception following the merger between Suzano Papel e Celulose and Fibria in January 2019.
- The results have been driven by strong pulp sales and higher prices in the market. Suzano has the world’s largest inventory levels, however this is still below optimum operational levels, as current supply cannot meet current demand.
- The weakening of US$ against BRL at the end of the quarter was largely responsible for the net gain of R$10 billion, due to the positive impact of exchange variation on debt and derivatives contracted in US$.
- Suzano’s multi-billion-dollar project at Mato Grosso do Sul, will be one of the largest private sector investments under development in Brazil once the project commences following Board approval.
- These results follow Suzano’s milestone leaps in the ESG agenda including the announcement a biodiversity scheme to connect half a million hectares of native forests by 2030 and its issuing of a new US$1 billion Sustainability-Linked Bond (SLB) linked to environmental and social targets. Suzano has now raised over US$2.25 billion through SLBs since 2020 and 37% of the total debt is now issued through SLBs or other green finance products.
The results continue to be driven by strong pulp sales and higher prices in the market. Suzano ended the quarter with current pulp inventories below the optimum operational level. The paper segment was marked by solid commercial and operational performance, given prices increases and sales volume in the domestic market. Pulp sales during 2Q21 were 2.5 million tons, while paper sales totaled 296,000 tons, contributing to net revenue of R$9.8 billion in 2Q21.
Adjusted EBITDA, another important indicator of Suzano’s financial performance, totaled R$5.9 billion, an increase of 42% on the same period last year.
Suzano’s cash generation capacity, combined with prudent financial discipline, has helped reduce leverage in US$, as measured by net debt/adjusted EBITDA, to 3.3x as of 30 June 2021, compared to 3.8x at the end of 1Q21.
“Our results once again demonstrate Suzano's financial strength. Our performance in recent quarters has laid the groundwork necessary to build a landmark new pulp mill in Brazil”, says Walter Schalka, CEO of Suzano.
The multi-billion-dollar project at Mato Grosso do Sul, announced in May 2021, will be one of the largest private sector investments under development in Brazil once the project commences following Board approval.
Addressing the bottom line, the weakening of US$ against BRL at the end of the quarter was largely responsible for the net gain of R$10 billion. This is predominantly due to the positive impact of exchange variation on debt and derivatives contracted in US$.
The second quarter saw two milestones in Suzano’s Environmental, Social and Governance (ESG) agenda. Suzano announced a biodiversity scheme to connect half a million hectares of native forests by 2030 and increased the use of green finance within its capital structure in June by issuing a US$1 billion Sustainability-Linked Bond (SLB) linked to targets including the representation of women in leadership positions and the reduction of water use in industrial operations.
Suzano is the world's leading eucalyptus pulp producer and Latin America's largest paper and pulp producer. Guided by its purpose of renewing life through trees, Suzano is global player in developing sustainable and innovative solutions from renewable sources. Today the 97-year-old company plays a part in the lives of over 2 billion people via its 11 mills across Brazil and has the capacity to produce 10.9 million tons of market pulp and 1.4 million tons of paper a year, exporting to more than 100 countries. Suzano’s shares are traded on stock exchanges in Brazil and the United States.
All of Suzano’s ESG activity closely aligns with industry best practice and reporting models including the SDGs, SASB, Global Reporting Initiative (GRI), and the Task Force on Climate-related Financial Disclosures (TCFD) amongst others.
Suzano’s credentials as a sustainability leader are bolstered by key ESG indexes and ratings including the MSCI Index, Dow Jones Sustainability Index (DJSI), Brazil B3 Exchange’s Corporate Sustainability Index (ISE), and the Carbon Disclosure Project (CDP).